Cash delivery not part and parcel of Australia Post

As the use of cash continues to drop, companies such as Armaguard have expressed concern the decline would impact on their business model to deliver coins and bank notes safely.

While alternatives such as using Australia Post to move cash around the country have been flagged, its managing director Paul Graham hosed down the suggestion.

Such a move would stretch the postal service even further, he told a parliamentary hearing on Tuesday.

"A sustainable solution needs to be found for cash delivery nationally, but Australia Post is not the answer," he said.

"We simply do not have the infrastructure and resources required to deliver significant amounts of legal tender around the country, but we'll do what we can to support a sustainable cash-delivery solution."

Armaguard had been offered an emergency bailout of $26 million by Australia's major banks to keep the company going, which was rejected in favour of a financial lifeline from its parent company.

Mr Graham said Australia Post had been facing extra demand from offering banking services in areas where bank branches had closed, particularly in rural areas.

"We're now processing over a million business transactions annually on behalf of the banks, which was never envisaged or intended when (services) first commenced," Mr Graham said.

"In some cases, we are unable to meet customer demands .... we also need to consider ensuring the physical outlet is equipped to handle the extra customers and the increased safety and security measures."

The parliamentary hearing comes as the postal service moved to halve its letter delivery frequency.

Letters have been delivered every second business day from April, following a reduction in the amount of mail.

"Even with the recently approved 30 cent increase in stamp prices, Australia Post will still lose money on every letter sent," Mr Graham said.

Australian Associated Press